Super Funds with Corporate Trustees or that own Real Property
In relation to the 2014 year and future years, for audit purposes, the trustee(s) of a SMSF need to provide the following details each year:
- For corporate trustees of a SMSF, a copy of the most recent Company Statement issued by the Australian Securities and Investments Commission
- A valuation at 30 June for any real property investment
- A title search for any real property investment – we are able to do this on your behalf for a small cost.
New Penalty Regime for Self Managed Superannuation Fund (SMSF) Trustees
We wish to remind trustees that from 1 July 2014, new laws give the Australian Taxation Office (ATO) greater powers to impose a range of penalties on trustees who breach superannuation laws.
It is important to note that the penalty is imposed on the trustee or trustees. Where a fund has individual trustees, each person may receive a penalty for the same contravention, whereas a corporate trustee is penalised only once.
Whilst the fund is audited each year by an independent third party, the trustee(s) remain responsible and need to ensure the fund complies with the superannuation laws. Failure to do so could result in the following:
- Rectification directions
- Education directions
- Administrative penalties
They will apply not only to contraventions occurring from 1 July 2014 but also to contraventions that occurred prior to that date but continue after.
“Rectification directions” will be where the ATO can require a trustee to undertake a specific action to rectify a contravention. Evidence of compliance will need to be provided to the ATO and if not forthcoming, fines may apply.
The ATO will also be able to give an “education direction” requiring trustees to undertake a specified education course within a specified timeframe. Failure to successfully complete this and provide evidence to the ATO may also result in fines being levied.
Finally, the ATO will have the ability to impose “administrative penalties” directly on the trustee(s) for contraventions. These penalties can be up to $10,200 per trustee and must be paid personally, not using SMSF funds. Some of the contraventions and penalties are summarized below.
In addition to these new powers, the ATO still has access to existing powers including non-compliance, disqualification of trustees and civil or criminal prosecutions for serious or continued contraventions.
To avoid penalties, it is essential for trustees to ensure that their SMSF is fully compliant with superannuation laws. If you have any questions, please contact our office.
SISA Section | Rule | Administrative Penalty |
| s34(1) | Failure to comply with prescribed standards applicable to the operation of the superannuation entity. | $3,400 |
| s35B | Failure to prepare Financial Statements. | $1,700 |
| s65 | Lending or providing financial assistance to members and their relatives. | $10,200 |
| s67 | Super fund borrowings, outside the permitted exemptions (e.g. limited recourse borrowing arrangement). | $10,200 |
| s84 | Trustees have not taken reasonable steps to comply with the In House Asset Restrictions. | $10,200 |
| s103(1) & (2) | Failure to keep trustee minutes/elections for at least 10 years. | $1,700 |
| s104 | Failing to keep records of changes of trustees for at least 10 years. | $1,700 |
| s104A(2) | Failing to sign Trustee Declaration within 21 days of appointment and keeping it for at least 10 years. | $1,700 |
| s105 | Failing to keep member reports for 10 years. | $1,700 |
| s106* | Failing to notify ATO of an event that has significant adverse effect on the super fund’s financial position. | $10,200 |
| s106A(1) | Failing to notify the ATO of change of status of SMSF, e.g. super fund ceasing to be a SMSF. | $3,400 |
| s124(1) | Failing to make a written appointment of an investment manager. | $850 |
| s160 | Failing to comply with ATO Education directive. | $850 |
| s254(1) | Failing to provide the Regulator with information on the approved form within the prescribed time upon establishment of the super fund. | $850 |
| s347A(5) | Failing to complete a form with requested information provided by the Regulator as part of the Regulator’s Statistical Program. | $850 |
*Section 106 specifies that an event has a significant adverse effect when a trustee of a SMSF will not or may not be able to make payments to beneficiaries when the obligation to make payment arises (eg pensions).
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